April 10, 2019 / 11:48 PM / 2 months ago

Cybersecurity firm Cofense says Pamplona to sell stake after U.S. probe

(Reuters) - U.S. cybersecurity firm Cofense Inc said on Wednesday that buyout firm Pamplona Capital Management is seeking to sell its stake in the company following a year-long probe by U.S. national security regulators.

Pamplona declined to comment.

The pressure to divest comes as Washington increases scrutiny on foreign ownership of U.S. technology companies, including by China, and is paying closer attention to deals that could compromise the personal data of U.S. citizens. The U.S. intelligence community’s 2019 Worldwide Threat Assessment report cited Russia’s efforts to interfere in the U.S. political system.

Pamplona bought a minority stake in Cofense, which serves major corporations, in February 2018, when the company was known as PhishMe. Pamplona’s funds been partly backed by Russian billionaire Mikhail Fridman, who was on a February 2018 “oligarchs’ list” published by the U.S. Treasury Department, sources familiar with the matter said.

The Committee for Foreign Investment in the United States (CFIUS), which reviews deals for potential security risks, first contacted the company with questions about a month later, Cofense said in a one-page statement, providing a rare look at how CFIUS interacts with companies it scrutinizes.

The committee spent the next several months investigating Pamplona’s stake in Cofense, it added.

Pamplona and Cofense signed an agreement with CFIUS in late October to complete a sale by July 10, 2019 in a process that will be overseen by a trustee approved by the U.S. government, the statement said.

First round bids from buyers interested in acquiring Pamplona’s stake were submitted on Wednesday, it added.

A spokesman for the U.S. Department of the Treasury, which chairs CFIUS, declined to comment.

“Cofense continues to cooperate with CFIUS and to comply with all prescribed actions as a result of this investigation,” Cofense said. The Leesburg, Virginia-based company added that it has “refused clients based in China or Russia.”

The Wall Street Journal first reported the news.

Reuters previously reported that CFIUS pressured a Chinese company called Kunlun to divest dating app Grindr.

Reporting by Carl O'Donnell; Editing by Richard Chang

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